Xiaomi now third in major cities, pips Intex and Lenovo

iPhone's share fell further during June quarter to 2.5% in top 30 cities; demand from smaller towns now growing faster than tier-1 cities

Chinese smartphone major Xiaomi overtook Intex and Lenovo to become the third largest brand by sales in major urban markets during the April-June quarter.

Data from International Data Corporation (IDC) India shows Xiaomi jumped three spots, from sixth position in the three-month period ending March 31.

In the country’s top 30 cities, Xiaomi reached 8.1 per cent of the smartphone market, up from 4.9 per cent in the earlier quarter. (MARKET SHARE OF MAJOR SMARTPHONE BRANDS)

In tier-1 towns cities, it had 10.5 per cent, up from 6.2 per cent three months before. In tier-II and tier-III places, it was fourth with 5.1 per cent, from sixth earlier.

Intex’s share remained eight per cent in both the top 30 and tier-I cities; it went down to fourth. Lenovo (including Moto) suffered heavily as its market share fell by 4.9 and 6.1 percentage points, respectively, in the top 30 and tier-1 cities.

Market leader Samsung continued to dominate but its share went down to 28.5 per cent from the earlier 29.7 per cent in the top 30 cities, quarter on quarter (q-o-q). Micromax’s fell to 11.9 per cent, from 13.1 per cent.

The share of Apple, maker of iPhones, plunged to 2.5 per cent, from 4.6 per cent during October-December last year, due to lower sales of the iPhone SE in the country.

It share in the above Rs 20,000 ($300) price segment went down to 35.6 per cent, from 52.3 per cent qoq. iPhone models such as the 5S, 6 and 6S drove Apple’s volume during the first half of the year.

According to analysts from IDC, “signs of saturation” have appeared in the recent past in urban markets, especially in tier-1 places, leading vendors towards tier-2 and tier-3 ones, and rural areas, setting up offline distribution networks.

A majority of sales still take place in tier-1, and the top 30 cities had growth of 10.2 per cent qoq in April-June. However, “the demand from tier 2 & 3 cities is outgrowing tier-1 cities, 12.9 per cent growth versus 8.1 per cent for the latter”, IDC said.  

“We are seeing changes in the distribution strategies by many vendors, with popular online exclusive models being made available offline as well, such as the Xiaomi Redmi Note3, Le Eco Le1s, Moto G Turbo Edition, etc. This is indicative of an evolving hybrid distribution structure —online plus offline, which will help these vendors bring their popular smartphone models into smaller towns & cities,” said Upasana Joshi, senior market analyst, IDC India.

Two of the Chinese brands, Oppo and Vivo, have taken 4.1 per cent and 3.3 per cent of the tier-2 and 3 markets, through aggressive marketing and channel expansion. Their market shares in the top 30 cities were 3.3 per cent and 2.9 per cent, respectively.

“Apart from Lyf, other Indian vendors were unable to hold on to their market share in the quarter,” said Varun Singh, market analyst, IDC India.

Chinese firms continued to gain share by offering products at competitive prices and with increasing availability. This also helped the market develop for Rs 10,000 ($150) to Rs 17,000 ($250) smartphones in tier-1, 2 and 3 towns.

The contribution of this segment grew to 28 per cent in tier-1 in the quarter, from 19 per cent in the earlier one.

In tier-2 and 3 towns, the share went up to 24 per cent, from 17 per cent.

“This is a clear indication that the offline channel cannot be wished away by vendors for operating long-term in the highly competitive Indian market,” said Singh.